Silver Prices Supported As the Buck Softens

2016-04-11 11:59:00

Alejandro Zambrano, Market Analyst

Talking Points

Silver prices gain as the Dollar softens and risk aversion remains high.
The short-term downtrend has ended as the March 31 high of $15.56 is taken out.
There are no known market-moving data releases scheduled for today. However, the Fed's Dudley and Kaplan are set to speak at the end of the European session and may send silver prices swirling.

Silver prices (FXCM: XAG/USD) are higher by 1.25% at the time of writing. The move higher is, according to the business press, supported by low U.S. interest rates having triggered a soft dollar and elevated levels of market volatility over the last few months. In regards to the latter we have seen significant swings in the Japanese Yen and Japanese Stock market over the last few weeks, and with this in mind traders are said to be seeking safe harbors for precious metals such as silver and gold.

With silver prices now trading above the March 31 high of $15.56, the sequence of lower and lower swing lows in place since March 18 can now be said to be over, taking the downtrend with it. The next level of resistance which is now in play is the March 21 low of $15.72 followed by the March 22 high of $15.93.

Support can be found at Friday’s low of $15.15 as this is the current short-term trend defining level (given that it’s the most recently formed swing low). We do note that price is short-term overbought according to the 14-period RSI indicator noting the four-hour-chart being at 72.6, but also on trading 41 cents away from the nearest swing low and 36 cents away from the nearest swing high. The latter implies that the potential risk (41 cents) is higher than the potential reward (36 cents). The risk/reward ratio is shown to be an essential ingredient in the strategies of successful traders surveyed by DailyFX.

There are no known market-moving data releases scheduled for today. However, the Fed's Dudley and Kaplan are set to speak at the end of the European session and may send silver prices swirling.

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Silver Price | FXCM: XAG/USD